Legal Funding — sometimes called litigation finance, third-party litigation finance (TPLF), or
alternative litigation financing (ALF), this refers to transactions in which a
third party provides capital to one of the parties to a legal claim (e.g., a
plaintiff, defendant, or law firm). This is done on a nonrecourse basis in
exchange for a financial interest in the outcome of the claim or a lien on the
law firm. Repayment of the financing is generally contingent on a successful
outcome of the underlying claim, whether by way of a judgment or, as is more
frequently the case, an out-of-court settlement between the parties. If the
litigation is unsuccessful, the lender is owed nothing.